UK P&amp;I's New Approach to Risk Management

Monday, 16 January 2012 14:58

The UK P&I Club takes a BowTie approach to risk management.

Marine mutuals like the UK P&I Club are committed to reducing the number and size of insurance claims they receive. After all, in the P&I world, members own their respective clubs and through pool arrangements within individual clubs, they in effect pay their own claims. The smaller the level of claims, the healthier the club becomes and this has a knock-on effect on the cost of insuring through the club.

After much study and only after in-depth trials with certain shipowners, the UK P&I Club is now launching an innovative risk management scheme utilising a ‘BowTie’ approach to identifying areas of risk and minimising the occurrence of incidents. The Club’s Loss Prevention Director, Karl Lumbers, explains:

“Working with those members who wish to identify the various threats to the smooth (claim-free) running of their vessels, we conduct reviews on those areas which may cause claims. Thomas Miller P&I Ltd, the manager of the UK Club, has access to an incomparable amount of claims data resulting from extensive analysis of previous incidents over a period of 23 years and it is this that has enabled the Club to identify ‘threats’, ‘consequences’ and ‘controls’, the foundations of developing BowTie reports on individual vessels.”

As an example, on one vessel, a Panamax bulk carrier, five ‘hazards’ were selected as being the most frequent liability claim areas seen by the Club. These were:

Following an extensive on-board survey,’threats’ relating to all five hazards were assessed, ‘controls’ that needed attention were identified and recommendations for changes in working practices were proposed to the master and owner/manager.

Applying the BowTie concept to management of risk on board ships

According to Karl Lumbers, the UK Club has been analysing claims over a period of 23 years, and has identified seven primary risk hazards; 76 common threats, which if not contained could cause an incident; and 450 controls which need to be in place and effective if the threats are to be contained. He states:

“Although sixty per cent of UK Club claims are caused by ‘human error’, human error is often only ‘the straw that breaks the camel’s back’ – the last event in a chain of causal events.

“These causal events can normally be traced back to failures in one or more areas of ship operation; we sometimes refer to them as ‘accidents waiting to happen’.

“How can we reduce the frequency of these ‘accidents waiting to happen’? What ‘controls’ should we be looking at to ensure the ’threat’ is contained and an ‘incident’ does not occur?”

Tangible benefits to shipowners

The Club’s approach offers strategic guidance to owners and operators on tackling the root cause of expensive claims. Using quantified real-life case examples owners/operators are able to invest proportionately in risk management and loss prevention activity.